Real Estate Licensing Flashcards
(148 cards)
1
Q
What certifies that property is free from contamination?
A
21E Certificate
2
Q
FHA financing program for anyone purchasing a primary 1-4 family, owner-occupied residence
A
203(b)
3
Q
way to defer capital gains tax; property owner must re-invest profits from the sale of an investment property into another investment property within 6 months
A
1031 Exchange
4
Q
independent contractor status according to the IRS tax classifications
A
1099
5
Q
tax form used to report real estate sales to the IRS
A
1099S
6
Q
Affiliated Business Arrangements; service providers, such as mortgage brokers and real estate attorneys, package their services together as an offering to their clients
A
ABAs
7
Q
when the tenant leaves the property before the lease expires, without consent
A
abandonment
8
Q
a reduction of municipal property taxes; must file taxes before requesting
A
abatement
9
Q
a history of property ownership (title), summerizing all instruments of chain of ownership; provided by lender’s attorney and paid by borrower
A
abstract of title
10
Q
neighboring land with a common boundary
A
abutting
11
Q
a clause in the note protecting the lender by permitting them to demand the loan balance be paid immediately in the event of a default
A
acceleration clause
12
Q
indication by the offeree (most often by signature)that they are willing to be bound by terms of offer from offeror
A
acceptance
13
Q
increase of property by gradual natural additions (usually wind or water)
A
accretion
14
Q
the water’s edge; often the mean of high tide line
A
accretion line
15
Q
difference between cost of replacing property new as of date of appraisal and present value; already occurs when property is purchased
A
accrued depreciation
16
Q
an act of executing a legal instrument such as a deed, mortgage or discharge before a lawyer or other officer of state such as a notary public; this act declares signing to be free and voluntary; this is necessary before recording at registry
A
acknowledgement
17
Q
43,560 square feet
A
acre
18
Q
a way in which a lease can be terminated; includes eminent domain taking, tax sale, etc
A
action of law
19
Q
legal action originated by lessor whereby lessee in default is physically ousted pursuant to a court order (unlawful detainer)
A
active income
20
Q
legal action originated by lessor whereby lessee in default is physically ousted pursuant to a court order (unlawful detainer)
A
actual eviction
21
Q
nearby or abutting
A
adjacent
22
Q
touching and contiguous
A
adjoining
23
Q
the proration of costs and income (taxes, rents, HOA fees, etc.) between buyer and seller at closing of title (passing of papers)
A
adjustments
24
Q
person appointed by court to probate or prove and settle estate of person leaving no will
A
administrator/administratrix
25
tax assessment based on actual value
ad valorem
26
one of the tests to determine if something is real or personal property; was it custom built to fit the space or can it fit anywhere
adaptability
27
the right to acquire legal title to privately owned property if held openly, notoriously, adversely and without permission for 20 years; also known as squatter's rights
adverse possession
28
soil deposited by wind, such as sand dunes or silt
aeolian soil
29
a sworn written statement
affidavit
30
a solemn declaration
affirmation
31
a contract by which someone represents another in a transaction or area of business
agency
32
created by CERCLA as part of their environmental protection programs
agency for toxic substances and disease registry
33
an individual, corporation, or other person, acting on behalf of another person with permission and legally binding authority
agent
34
one of the tests to determine whether something is real or personal property; buyer and seller agree to make that decision; this overrides all other tests, but should be in writing per Statute of Frauds
agreement
35
a broker deposits a client's escrow deposit into his operating account. this is:
commingling
36
mark and mary are married and are selling their primary residence that they have owned for 30 years. when they sell their home, how much will they be able to shelter from capital gains tax?
$500,000
37
a homeowner pays $5,600 in taxes on their home this year. if their market value was $475,000 assessed at 75%, what was the town tax rate per $100 of value?
$1.57
Explanation:
475,000 x .75 = 356,250
5,600/356,250 = .0157 x 100 = 1.57
38
ownership or lease of air space over a specific parcel of realty, such as a building over a turnpike; also known as air lots or vertical interests; typically extend no more than 80-500ft above real estate, depending on where navigable air space begins
air rights
39
a bilateral contract whereby buyer promises to buy and seller promises to sell by execution and delivery of deed; also known as purchase and sale agreement (p&s); agreement means the same as contract
agreement of sale
40
loss of ownership; can be voluntary, such as in a real estate sale or involuntary, such as in a foreclosure
alientation
41
also known as due on sale clause or assumption clause; permits lender to speed up the due date of the loan in the event of a title transfer; prevents transfer of mortgage to a third party
alienation clause
42
increasing of land area along a shore by deposited alluvium or by the recession of water
alluvion
43
clay, silt, sand, gravel, or similar detrital material deposited by running water
alluvium
44
the features of a property that make it desirable like fitness centers, access to transport, views, etc.
amenities
45
the payment of a debt in equal installments; each payment is the same, and pays down the debt over time, with a portion of each payment going to the principal and interest on the loan
amortization
46
major tenants which draw customers to a shopping center, such as department stores
anchor tenants
47
when property that was personal becomes real
annexation
48
sheet that shows the annual income of a rental property; profit and loss statements for investment properties; looks at vacancies, operating expenses (debt service (mortgage), and capital expenditures (improvements))
annual property operating data (APOD sheet)
49
the benefit of property owner expects to receive over the lifetime of their ownership
anticipation
50
an estimate of value
appraisal
51
professionals with an appraisal license who estimate what buyers will pay for real estate
appraiser
52
increase in value resulting from market forces such as demand stronger than supply
appreciation
53
three methods used by appraiser to form an estimate of value such as cost, market and income approaches
approaches to value
54
an item or right belonging to and passing with a property such as having a right of way through adjoining property (belonging to something else, either by attachment or by law)
appurtenance (appurtenant)
55
adjustable rate mortgage; loan with an interest rate that adjusts
ARM
56
an open and willing sale without cooperation or coordination between the buyer and seller
arm's length transaction
57
deed essentials
- must be in writing
- grantor must be legally competent
- signature of the grantor
- must name grantee
- involve the exchange of consideration
- include a full legal description of land
- include a granting clause
- delivery and acceptance
- sometimes - habendum "to have and to hold"
58
shows location and dimension of the land
survey sketch
59
shows the location and dimension of the land, plus location, size, and shape of the improvements to the land
spot survey
60
link
7.92 inches (call it 8 inches for memorization)
61
foot
12 inches
62
yard
3 feet
63
rod
16 feet 6 inches
64
chain
66 feet
65
furlong
660 feet
66
mile
5,280 feet
67
acre
43,560 square feet (1 chain x 1 furlong)
68
square mile
640 acres
69
three main types of land description
- metes and bounds (most common)
- lot and block (recorded plan for a subdivision or municipality)
- government rectangular survey (not used in MA or other 13 original colonies)
70
Also known as Public Land Survey System or Rectangular Survey System
Government Rectangular Survey System
71
What is the size of a Township? (miles and acres)
6x6 miles or 36 square miles or 23,040 acres
72
Where is section 1 in a Township?
Northeastern corner
73
What section is the school section in a Township?
16th section
74
ONCHA
open, notorious, continuous, hostile, adverse
20+ years
legal term for squatters rights
does not apply to public or registered land
75
the 4 basic government limitation (public limitation)
1) police power
2) eminent domain
3) taxes
4) escheat
76
police power
the right of the government to regulate private activity if it's in the public interest to do so
77
eminent domain
the right of government to force the sale of privately owned property if it is in the public interest - under the 5th Amendment of the US Constitution, the government must pay the property owner fair market value for the property
78
condemnation
the legal process for taking of land by eminent domain
79
taxes
municipal property taxes - the primary source of revenue for municipal governments
80
escheat
the reversionary interest the state maintains in all privately owned property - if a property owner dies without a will or heirs, their property transfers to the government
81
Chapter 40A
MGL Ch 40A - Massachusetts zoning laws - "Zoning Enabling Act"
82
zoning ordinances include:
use - purposes for which property may be used (residential or commercial)
heights - building heights
setbacks - distance from lot lines before building is permitted
lot size - minimum permissible lot size
buffer zones - areas where you cannot build anything; used to ease transitions between zoning areas (e.g. industrial to residential zoning)
83
forms of zoning:
```
single family homes (detached homes)
multifamily homes (apartment buildings)
condominiums
cooperatives
mixed use developments
planned unit developments
```
84
an action to quiet title is used to:
determine ownership of property
85
rights included in bundle of rights
- possession
- exclusion
- control
- disposition
- enjoyment
86
The grantee of a deed with restrictions receives what sort of estate?
Fee simple defeasible.
A fee simple defeasible estate is ownership of real estate that can be lost. The violation of a deed restriction (which is a limitation on your property rights written into your deed) is one way that a property owner can lose ownership, meaning they have a fee simple defeasible estate under the deed restriction.
87
A developer of a 10 home subdivision would likely benefit most from which of the following mortgage clauses?
Partial release clause.
| A partial release clause would allow the developer to pay off part of the mortgage whenever an individual home was sold.
88
Easements appurtenant can be created in the following ways except:
- by prescription
- by necessity
- by encroachment
- by deed
By encroachment.
Easements appurtenant cannot be created by encroachment; encroachment acquires ownership of the land, not just a right to use it.
89
A log cabin that borders a small stream in Maine would likely have what property rights to the water?
Rights to the middle of the stream.
Riparian rights in the original 13 colonies, including Maine, states that if the waterway is non navigable, then the property bordering it, owns up to the midpoint.
90
How many years' experience must brokers on the Board of Registration of Real Estate Brokers and Salespersons have?
7
| Three of the Board members must be brokers with at least 7 years or more of experience.
91
Redlining is:
differentiation on credit terms based on protected class
92
a property management agreement establishes:
agency authority between a property manager and property owner
93
fannie mae was founded by the US government to:
inject liquidity into the credit market
Fannie Mae is a secondary market loan buyer. It is one of three major entities on the secondary mortgage market, and was established by the U.S. government to encourage lenders to make borrower friendly loans and to inject liquidity into the market, which makes loans more readily available.
94
A septic system has been pumped annually. Under Title V, how long prior to sale does it have to pass inspection?
3 years
Title V requires septic systems to pass inspection within 2 years prior to sale (3 if pumped every year), or 6 months after the sale.
95
Contingent sales (also known as "tying arrangements") are prohibited by:
The Sherman Anti-Trust Act of 1890
The Sherman Anti-Trust Act prohibits contingent sales or "tying agreements," where the purchase of one item also requires the buyer to purchase another product or service from the seller.
96
What must an agent have in order to place a for sale sign on a client's property?
Written permission from the client.
Agents and brokers need written permission from the client to list a client property on MLS and to place a for sale sign on the seller's property.
97
Sam & Sarah fall in love with two houses, one on the beach and one in the city. They can't decide which one they like better so they make offers on both with a $1,000 deposit included with each offer and an expiration date of 24 hours. Within 5 hours, they hear back from the seller of the city home that their offer is accepted. An hour later, they hear back from the seller of the beach home that their offer is accepted. How much will they pay in offer deposits?
They will owe $2,000 in offer deposits.
Even if the buyers only want one of the homes, once their offers have been accepted, it's a legal binding contract and the offer deposits are due on both of the homes.
98
If an investor uses an economic life of 27.5 years when writing off depreciation on their yearly tax return, which method is being used to calculate this?
Straight-line method.
The straight line method calculates depreciation by using an economic life given by the IRS to calculate an annual loss in the property's value.
99
Fred is a farmer who grows corn on his property. Fred decides to sell his property to Brad prior to his harvesting of the corn. After the sale, Brad goes to the property and to his surprise, all of the corn has been harvested. Was it Fred's right to harvest the corn?
Yes, because Fred planted the corn.
Crops that are planted and are harvested annually or biannually (like corn or wheat) are considered to be emblements. Emblements are not treated as real property because they are not intended to be permanent. Since Fred planted the corn, and corn is considered to be an emblement, Fred was able to harvest the corn from the farm.
100
Bill owns a home with a jacuzzi tub installed in his back porch. Jones offers to purchase Bill's home, his offer is accepted, and they sign a purchase and sale contract. This P&S does not mention the jacuzzi. What may Bill do with it?
Nothing. If real property is not explicitly excluded from the P&S, it must be left with the property.
All real estate (property directly or indirectly attached to the land) is included in a real estate sale by default. Since Bill's jacuzzi is attached to his porch, it is indirectly attached to the land, and therefore is included in the sale.
101
Sam has fallen on hard times and is unable to pay his property tax bill of $10,000. The town puts a property tax lien against Sam's house. The town sells Sam's house to Rick through a tax sale. A week after the tax sale, Sam wins $25,000 through a scratch ticket and wants to get his house back. Can he do so?
Yes, because he can redeem the home by paying off the tax debt plus interest and costs
Explanation: If a property owner doesn't pay their taxes, the town or city in which the property is located will put a property tax lien against the house, and it may then sell the rights to that house subject to a right of redemption. If the owner pays off the taxes prior to the foreclosure of the right of redemption (meaning the end of their right to buy it back), the owner can get their property back.
102
The main difference between a variance and a conditional use permit is that with a conditional use permit:
The change in use is restricted to a specific purpose
Explanation: A variance and a conditional use permit are both special permissions to change from one type of zoning to another. With a conditional use permit there is special language that dictates the change is restricted to a specific purpose that is deemed to be in the public's best interest, such as adding a grocery store to a neighborhood.
103
The case establishing when a real estate agent is entitled to his or her commission in MA is:
Tristram's Landing v Wait
104
separation of land from one area and its attachment to another by water (sudden separation caused by flooding or change of course in a river)
avulsion
105
something that a property owner can claim in order to receive compensation when an adjacent public land use lowers their property value
inverse condemnation
106
Mark signs an offer to sell his home to Mary. This is most similar to:
a. offer
b. recordation
c. performance
d. mutual assent
d. mutual assent
also called meeting of the minds, mutual agreement, or offer and acceptance - an agreement between two parties usually evidenced by signature and acceptance
107
if a deed is not recorded, which of the following could happen?
a. the seller could take back the property
b. a future deed could take precedence over the unrecorded deed
c. the buyer could not sell the property
d. a town could not foreclose on the property for unpaid taxes
b. a future deed could take precedence over the unrecorded deed
in the event that there is a dispute over ownership, land court often favors the first recorded deed. there is therefore the risk that a future deed (if recorded) could take precedence over the unrecorded deed in the event of an ownership dispute
108
a general warranty deed would not feature a:
a. covenant of seisin
b. covenant of agreed value
c. covenant of quiet enjoyment
b. covenant of agreed value
109
a freehold, or ownership, claim to real estate
seisin
110
the principal can make direct payments to the:
a. broker of record
b. managing broker
c. salesperson
d. co-broker
a. broker of record
111
a broker is the ____ to the seller and the ____ to the salesperson.
special agent, principal
112
dwight wants to buy a 40 acre horse farm. he'd like to purchase both the farm and the specialty horse equipment he will need in order to run the farm. which type of financing would be best for dwight?
package mortgage
113
mortgagee protection under a title insurance policy would cover which of the following?
a. an unrecorded easement
b. a change in zoning laws
c. a deed error
d. an outstanding loan balance
d. an outstanding loan balance
mortgagee protection means lender protection. the lender's title insurance policy covers an outstanding loan balance in the event of any title issues.
114
the purpose of mgl chapter 93a is:
to protect consumers from deceptive business practices
115
if a broker has accepted a listing located outside of the commonwealth of massachusetts, they must:
file notice with the board within 7 days
116
the maximum penalty for violating mgl chapter 93a would include any of the following, except:
a. attorney's fees
b. treble damages
c. triple damages
d. double damages
d. double damages
| double damages are the minimum
117
the presence of radon on a property:
a. prevents sale
b. must be tested for
c. is subject to mgl 93a
d. does not prevent sale
d. does not prevent sale
agents are required to disclose any known environmental hazards, such as the presence of radon, as defects to the prospective buyer. however, the presence of such a defect does not prevent the sale of real estate.
118
in the event of a legal claim, the real estate broker's bond may:
a. be cashed in by the broker to defray legal costs
b. may be cashed in by the real estate board
c. must remain on file with the board
d. will be cashed in by the broker to pay the aggrieved party
b. may be cashed in by the real estate board
the real estate broker's bond is made payable to the commonwealth of massachusetts, and may not be used by the broker to defray legal expenses. it can only be cashed in by the board in order to compensate a party harmed by a broker's mishandling of escrow funds.
119
fred, a stockbroker and good friend of tom, refers a new real estate client to tom. as thanks for the referral tom gives fred a $100 gift certificate to fred's favorite restaurant. has tom risked his real estate license?
yes, because fred is not licensed
| massachusetts law outlaws the payment of referral fees to unlicensed persons.
120
an agent must report their conviction of a criminal offense to the board within:
30 days
| including any misdemeanor or felony
121
the maximum interest due payable on a security deposit is:
5%
| landlords must pay either 5% or market rates, whichever is less
122
as a real estate agent, when must you provide a purchaser of real estate the agency disclosure statement?
at the first meeting to discuss a specific piece of property
123
you as a real estate licensee receive an offer to buy a condominium you have listed, but the offeror refuses to give a binder with the offer. you should:
submit the offer
| all offers and counteroffers (written, verbal, or otherwise) must be brought to the client. no exceptions to this rule.
124
a real estate agent receives 2 p&s checks from 2 different transactions, along with a commission payment for a recently closed deal from their employing broker. what is the correct thing for the agent to do with these checks?
deposit the commission check and give the p&s checks to the employing broker
125
sherman anti trust act
prevents businesses from coming to an agreement that would restrict competition in the market. An agreement between brokerages to separate different areas of the market would restrict competition and would not be allowed
126
cash flow is an expression of:
net operating income less debt service and capital expenditures
127
hazardous material that was used as an insulation material and fire retardant; carcinogenic; most often seen in homes with popcorn ceilings; most dangerous in a friable state
asbestos
128
the act or process of combining two or more lots into one
assemblage
129
also known as tax value; value given to realty by assessor's office for property taxation purposes
assessed value
130
all of the property someone owns
assets
131
transfer of one's remaining interest in a lease or option to a third party
assignment
132
person receiving a portion of rights or obligations under someone else's contract
assignee
133
person assigning a contract
assignor
134
a broker who chooses to work for another broker
associate broker
135
method of taking over a mortgage; borrower and original mortgagor are both responsible for the loan and liability for any deficiency after foreclosure; joint responsibility
assumption of mortgage
136
the total amount a limited partner has invested and can lose; any tax deduction for losses by a limited partner is limited to this at risk amount
at risk
137
a writ issued, beginning or during a legal action commanding sheriff to attach ("seize") property, rights and effects of defendant to satisfy possible credit demands of plaintiff if judgment comes out in plaintiff's favor; involuntary lien
attachment (court action)
138
one of the ways to test whether something is real or personal property; whether or not the property is attached with roots or nails to the land
attachment (test)
139
affirmation that something is true or authentic
attest
140
testimony or evidence given under oath
attestation
141
a licensed lawyer
attorney-at-law
142
A right belonging to and passing with a property such as having a right of way through adjoining property
appurtenance
143
An open and willing sale without cooperation or coordination between the buyer and seller
arm's length transaction
144
Transfer of one's remaining interest in a lease or option to a third party
assignment
145
Person assigning a contract
assignor
146
Method of taking over a mortgage; borrower and original mortgagor are both responsible for the loan and liability for any deficiency after foreclosure; joint responsibility
assumption of mortgage
147
Testimony or evidence given under oath
attestation
148
A right belonging to and passing with a property such as having a right of way through adjoining property
appurtenance
